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Bookkeeper versus Accountant | What's The Difference? What is the difference? According to Accountingcoach.com: "Bookkeeping includes the recording, storing and retrieving of financial transactions for a business, nonprofit organization, individual etc. Accounting is the recording of financial transactions along with storing, sorting retrieving, summarizing, and presenting the results in various reports and analyses. Accounting is also a field of study and profession dedicated to carrying out those tasks." In summary, accountants produce reports and analyses where bookkeepers do not. Which is best for your business? My advice, rather the person you are working with calls themself a bookkeeper or accountant, the most important thing is you trust their work and the results you are getting each month and at the end of each year. Also notice, neither of the definitions above state anything about the person having a higher-level education. In other words, whoever you might be ...

Clean versus Clear Financials | Do You Know The Difference? What is the difference? I would classify clean financials as financials that follow GAAP (Generally Accepted Accounting Principals) and can be used for professional purposes. For example, taking them into a bank in order to apply for a business loan. Or using them while working with your tax preparer to file your income taxes with the IRS. These would be examples of clean financials. All of your accounting data is in the proper place on your financials. Now let's talk about clear financials. Clear financials are more like management tools. Maybe they are used internally to determine gross margin on your products or services. Or maybe your clear financials are analyzed to better understand your business expenses and determine where you need to cut back spending. Ideally, your accountant should be producing both clean and clear financials regularly. Business owners really need both. There is really a big difference between t...

What Is An Owners Draw or Distributions? A lot of entrepreneurs ask me "Where has my net income from my business gone?" One of the first places I go and look and more often than not the answer is the Equity Section on the Balance Sheet. The owner's draw or owner distribution account is found on the balance sheet, meaning it is not directly tied to the income statement. An entrepreneur might have 100K in net income, but if they have taken 95K out in an owner's draw or distribution, they won't have much cash left. In addition, most entrepreneurs don't realize that the owners draw or distribution account is often where expenses that are charged to the business that are not business-related end up. So while an entrepreneur has been purchasing their personal Netflix subscription through their business, a lot of times they are not aware that the purchase does not end up on their income statement. The really important thing to remember is the owner's draw account...